Yen Soars Amid Brexit Fears

In the toxic aftermath of the UK’s decision to leave the European Union (EU), the Yen has soared as investors have moved to traditional safe havens, as turbulence has continued with the value of the British pound.

Currently the USD/JPY rate is 101.8, a dramatic fall from 106 only last week, and its pattern that looks set to continue, as the UK pound continues to suffer from ‘Brexit’,  the GBP/USD rate has fallen to $1.32, declining further from $1.37 at the end of last week, after the referendum result had been announced.
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LMAX Exchange in their daily report, said that USD/JPY has opened lower to start the new week, though has managed to find some support on recoveries in local equity markets.

At this point the forex company said , the intense downside pressure on the Yen is something that could remain for a while to come, with fear of systemic threat from Brexit fueling massive safe haven bids, favorably impacting the correlated Yen.

At the same time, Yen bulls should  be careful not to get too aggressive, with the USD/JPY rate having dipped back below 100.00 and into an area where the Ministry of Finance and the Bank of Japan,  could be taking action to aggressively defend against the unwanted currency appreciation.

Political Chaos Continues in UK

The political fall out from the UK’s ‘Brexit’ choice continues to escalate, having claimed the scalp of Prime Minister David Cameron, as the opposition leader of the Labour Party Jeremy Corbyn has been urged to resign after there was a spate of resignations from the shadow cabinet.

Also, pro-EU UK Chancellor George Osborne has spoken for the first time since the ‘Brexit‘ decision was made, and insists that the UK approaches a new era from a position of strength, although he said there would need to be “adjustment” in the UK economy.

On the procedure of the UK’s departure from the EU, he opined that only the UK can trigger Article 50, the stipulation in the EU Lisbon Treaty, which creates the legal pathway to withdraw from the EU.

Osborne also said that the UK should only activate Article 50, when there is a clear view about what new arrangements will actually mean with the UK‘s European counterparts.

“In the meantime, during the negotiations that will follow, there will be no change to people’s rights to travel and work, and to the way our goods and services are traded or to the way our economy and financial system is regulated.” He stated.

Calls for Second Referendum Grows

 A petition calling for second referendum on membership of the EU has attracted 3.6 million signatures, it has called for to implement a rule that if the remain or leave vote is less than 60% based a turnout less than 75%, than there should be another referendum.

Former Prime Minister Tony Blair said that even though he could not envisage another referendum being legally called, it was not impossible for it to happen.